Timing carbon capture and storage (CCS) deployment across borders: A game-theoretic analysis

Yiwen Chen, Nora Paulus, Xi Wan and Benteng Zou

Economic Modelling, 2025, vol. 151, issue C

Abstract: Carbon capture and storage (CCS) is a crucial technology for reducing carbon emissions and mitigating climate change; however, its high deployment cost has resulted in uneven global adoption. This study develops a differential game model involving heterogeneous countries exposed to transboundary pollution to analyse the optimal timing for initiating CCS. Potentially, two-stage games are played where the transition from the first to the second stage is endogenously determined by the two players. We establish the existence of Markov Perfect Equilibria for general functions and provide numerical illustrations using linear–quadratic specifications. The relevant results are fourfold: (1) the threshold for CCS adoption not only depends on a country’s own costs, but also on those of others and the extent of pollution damage; (2) CCS is optimally initiated when domestic pollution crosses a critical level; (3) symmetrical pollution damage increases free-riding incentives and worsens long-term environmental outcomes; and (4) in some scenarios, it is socially optimal for certain countries to never adopt CCS, even when facing similar pollution damage as others. Global cooperation is essential for deploying CCS technologies effectively, ensuring significant emissions reductions and progress against climate change.

Keywords: Carbon capture and storage; Optimal timing; Markovian perfect equilibrium (search for similar items in EconPapers)
JEL-codes: C61 C72 Q53 Q58 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999325001865
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:151:y:2025:i:c:s0264999325001865

DOI: 10.1016/j.econmod.2025.107191

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().